Hello, this question was already answered for me by an individual, but I would l
ID: 3203531 • Letter: H
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Hello, this question was already answered for me by an individual, but I would like someone else to answer letters a-d for me agaijn because I don't understand why the answers were the way they were.
13. In a 1991 issue of the Cato Journal, Santerre et al. estimate an infant mortality equation using a sample of 20 countries belonging to the Organization for Economic Cooperation and Development (OECD) during the six adjacent half decades from 1960 to 1985 and a fixed effects model. They obtained the following (abbreviated) results: IMR 3.93 -0.069TIME -0.892RGDP-0.539PHYS 0,707 URBAN 0.004FLFPR -0.135ED (2.60)(1.112) (6.89) 6.83 4.21 1.21 2.34 Adjusted R 954, N 110 All of the variables have been converted to logarithms so the coefficient estimates can be treated as elasticities. The numbers below the estimated coefficients repre sent t-statistics. IMR infant mortality rate in each country for each year TIME a time trend from 1 to 5 (1960 to 1985) capturing changing technology and knowledge RGDP-real gross domestic product per capita in each country for each year PHYS number of physicians per capita in each country for each year URBAN percentage of the population in urban areas in each country for each year FLFPR female labor force participation rate in each country for each year ED-level of education in each country for each year Based upon these findings answer the following questions: a. What percentage of the variation in the infant mortality rate is explained by the independent variables? How do you know that? b. Using health production theory as much as possible, provide a hypothesis or theory about the relationship (direct or inverse) between the first three inde- pendent variables and the infant mortality rate. c. Are those three hypotheses supported by the regression results? Explain. d. Given that the estimated coefficients are also elasticities, interpret the coefficients on the number of physicians and real GDP e. Should we expect the physician elasticity to remain constant if increasingly more physicians are employed in the typical health economy? Why or why not? f. Based upon those findings explain why the infant mortality rate may be so much higher in Turkey than Japan?Explanation / Answer
a) This can very well be answered by R Square value. Given that R Square = .954, so independent variables expalin 95.4 % of the variation of IMR.
b) The health story will be that with Time, Increasing GDP and increasing number of physicians the infant mortality rate should come down over the years. (inverse relationship)
c) As the coefficients of first three independent variables are negative, it suggests an inverse relationship telling that with increase of these independent variable IMR will fall down and vice versa. So, regression equation supports the hypothesis.
d) The coefficients of GDP and Physicians are -0.892 and -0.539, it tells us that if GDP increases by 1 per year the IMR will fall down by 0.892. Similarly, if number of physicians increase by 1, IMR will fall down by 0.539.
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